Hunting for a profitable equities business
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Hunting for a profitable equities business

Focusing more than ever on profitablility, banks are making big changes in their businesses, not least in bringing debt and equity teams together. Antony Currie and Peter Koh report

JIM FORESE IS no equities banker. He's never worked in equities before, let alone traded a stock or managed an IPO. And he probably never thought he would. But at the end of May he was promoted from his role running Citigroup's emerging markets local finance to become global head of the bank's equities division.

"That's a real wake-up call for all of us," says a senior equities banker at a rival firm. He's not referring to one of the rumours about why Forese displaced former co-heads Robert DiFazio and Arthur Hyde, both career-long equities bankers: that rumour ponders whether it was the loss on the Nextel-Motoral exchangeable earlier in the year that led to the change. Citigroup allegedly lost around $50 million on the deal. Some reckon it was more than that.

It probably didn't help, but one bad deal wouldn't have been enough to prompt Citi to ask Robert Rubin, chairman of its executive committee, to carry out a strategic review of the whole equities business.

Rather, what's being referred to is the fact that Forese made his name running businesses at the time when they were going through severe margin pressures.

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